1. The cases originated in three applications
(nos. 44574/98, 45133/98 and 48316/99) against the Republic of Slovenia
lodged with the European Commission of Human Rights (“the Commission”)
under former Article 25 of the Convention for the Protection of Human
Rights and Fundamental Freedoms (“the Convention”) as well as with
the European Court of Human Rights by three Croatian nationals, Mr Ivo
Kovačić, Mr Marjan Mrkonjić and Mrs Dolores Golubović (“the applicants”),
on 17 July 1998, 2 June 1997 and 24 December 1998 respectively.

2. The Slovenian Government (“the Government”)
were represented by their Agent, Mr L. Bembič, State Attorney-General,
and by Messrs Cleary, Gottlieb, Steen and Hamilton, a law firm practising
in Paris.

3. The applicants complained under Article 1
of Protocol No. 1 of a violation of their right to the peaceful enjoyment
of their “possessions” in that they had not been able to withdraw
foreign currency which they had deposited before the dissolution of
the SFRY from “the Ljubljana Bank – Zagreb Main Branch”. They claimed
that the Ljubljana Bank or Slovenia, as a successor State which had
assumed the SFRY’s guarantee obligations for foreign-currency savings
on the break-up of Yugoslavia, should repay them the money deposited
with accrued interest.

4. Mr Kovačić also complained that he had been
discriminated against on the grounds of nationality, contrary to Article
14 of the Convention. He alleged that Slovenian account holders of the
Zagreb branch had been allowed to withdraw their savings.

5. The applications lodged by Mr Kovačić and
Mr Mrkonjić were transmitted to the Court on 1 November 1998, when
Protocol No. 11 to the Convention came into force (Article 5 § 2 of
Protocol No. 11).]

6. The applications were allocated to the Third
Section of the Court (Rule 52 § 1 of the Rules of Court). Within that
Section, the Chamber that would consider the case (Article 27 § 1 of
the Convention) was constituted as provided in Rule 26 § 1.

7. The Chamber decided to join the proceedings
in the applications (Rule 42 § 1).

8. By a decision of 9 October 2003, following
a hearing on admissibility and the merits (Rule 54 § 3), the Court
declared the applications admissible.

9. The applicants and the respondent Government
each filed further written observations (Rule 59 § 1). The parties
replied in writing to each other’s observations. In addition, third-party
comments were received from the Croatian Government, which had exercised
its right to intervene (Article 36 § 1 of the Convention and Rule 44
§ 1 (b)). The parties replied to those comments.

10. On 1 November 2004 the Court changed the composition
of its Sections (Rule 25 § 1), but this case remained with the Chamber
constituted within former Section III.

11. On 21 February 2005, the President of the
Chamber requested further information from the applicants and the respondent
and intervening Governments (Rule 59 § 1). The parties replied and
filed comments on each other’s replies.

12. On 25 July 2005 the respondent Government
submitted additional information. The applicants and the intervening
Government filed comments.

THE FACTS

13. The applicants
are Croatian nationals.

14. Mr Ivo Kovačić
was born in 1922 and lived in Zagreb. He died on 17 July 2004, in the
course of the proceedings. He was represented by Mr Milivoje Žugić,
a member of the Croatian Bar. His widow Mrs Miroslava Kovačić, his
daughter Mrs Marina Mušić and his son Mr Zlatko Kovačić have elected
to pursue the application before the Court. They continue to be represented
by Mr Žugić. For reasons of convenience, Mr Kovačić will continue
to be referred to as “the applicant” in this judgment.

15. Mr Marjan Mrkonjić,
who was born in 1941 and lives in Zurich, is represented by Mr Milivoje
Žugić (see paragraphs 131-137 below).

16. Mrs Dolores Golubović
was born in 1922 and lived in Karlovac. She was represented by Mr Zvonko
Nogolica, also a member of the Croatian Bar. She died on 15 October
2004. Her nephew, Mr Ivo Steinfl,haselected to pursue her application before the Court and is
represented by Mr Nogolica. Mrs Golubović will continue to be referred
to as “the applicant” in this judgment.

I. THE CIRCUMSTANCES OF THE CASES

17. Before the dissolution
of the Socialist Federal Republic of Yugoslavia (“the SFRY”), the
applicants or their relatives all deposited hard foreign currencies
in savings accounts with the office of a Slovenian bank – the Ljubljana
Bank (Ljubljanska banka) – in Zagreb (Croatia). Some of them also
held term accounts which matured in the late 1980s or early 1990s.

18. The facts of the
case, as submitted by the parties, may be summarised as follows.

A. Background to the cases

1. The Socialist Federal Republic of Yugoslavia

(a) The Ljubljana Bank and its Zagreb Office

19. The bank now called
the Ljubljana Bank (in Slovene: Ljubljanska banka) in the present-day Republic of Slovenia,
was founded in 1955 and subsequently underwentseveral changes of status and name.

20. In 1969 its legal
predecessor opened an office in Zagreb in the then Socialist Republic
of Croatia. It was re-registered in 1974 and in 1977.

21. From 1978 until
1 January 1990 the Ljubljana Bank Head Office (Ljubljanska banka – združena banka), a company existing
under the laws of the then Socialist Republic of Slovenia, operated
as an “associated bank”. It was made up of the Ljubljana Bank Basic
Banks, carrying on business in accordance with the principles of the
socialist self-management system. At the time, the Ljubljana Bank was
one of the major and most reputable socially-owned commercial banks
with offices in other Republics within the SFRY.

22. Over much the
same period, from 1977 until 1990, the Ljubljana Bank’s Zagreb office
operated as a “basic bank”, being neither a branch nor a subsidiary
of the Ljubljana Bank Head Office. The Ljubljana Bank Basic Bank Zagreb
(in Croat: Ljubljanska banka - Osnovna Banka Zagreb)had separate legal personality under the law of the Socialist
Republic of Croatia and was financially and economically independent.
It was, however, integrated into the organisational structure of the
Ljubljana Bank.

23. On 19 December
1989 the Ljubljana Bank Head Office was reregistered as a joint stock
company with effect from 1 January 1990.

24. On 29 December
1989 the Ljubljana Bank Basic Bank Zagreb was re-registered as the Zagreb
Main Branch(Glavna filijala Zagreb) with effect from 1
January 1990.

(b) The system of redepositing foreign-currency
savings

25. Individuals were
allowed to open foreign-currency savings accounts in the SFRY from 1965
onwards. From 25 December 1969 until the dates on which each successor
State declared its independence, all foreign-currency deposits were
covered by the Federation’s (“the SFRY’s”) statutory guarantee
(see section 76 of the Banks and Other Financial Institutions Act, Official
Gazette, no. 10/89, paragraph 151 below). Annual interest on savings
accounts attained levels of10% and more.

26. In 1977 a system
by which commercial banks re-deposited foreign-currency savings with
the National Bank of Yugoslavia (“the NBY”) in Belgrade was introduced
by the Foreign Exchange Operations and International Credit Relations
Act (Official Gazette, no. 15/77). Pursuant to section 51(2) of that
Act, the NBY was under an obligation to accept foreign-currency savings
deposited with authorised banks and to grant interest-free loans in
Yugoslav dinars (YUD) to the bank depositing the foreign currency. Although
the SFRY banks were not required by law to transfer the foreign-currency
deposits to the NBY, it is generally agreed that, in practice, they
had no other option.

27. From 1978 to 1988
further legislation regulating the re-deposit transactions was passed.
One of the decisions adopted in 1978 introduced the so-called “pro-forma”
or “accounting method” of re-depositing foreign exchange in order
to save considerable sums that would otherwise have gone towards fees
for neutral transactions. In the following years, only approximately
14% of foreign-currency deposits were actually transferred by the commercial
banks to the NBY.

28. From 1985 onwards
re-depositing banks were required to pay interest on the previously
interest-free loans in YUD granted in exchange for the foreign currency
re-deposited with the NBY.

29. On 15 October 1988
the system of re-deposits was brought to an end by amendments to the
Foreign Exchange Transactions Act (Official Gazette no. 59/88). The
amended section 14(4) provided that “[t]he conditions and procedure
applicable to the obligations arising under the guarantee [should] be
regulated by a separate federal law”. As no such law was enacted,
the remedies employed by the SFRY were based on ad hoc decrees. Only banks, not individual depositors, were
entitled to demand payment of foreign-currency deposits. A bank had
to be insolvent or bankrupt before a payment could be made under the
guarantee.

30. In 1991 the foreign-currency
claims of commercial banks against the NBY amounted to approximately
USD 12 billion and remained frozen.

(c) The monetary crisis and the Marković reforms

31. The problems resulting
from the foreign and domestic debt of the SFRY caused a monetary crisis
in the 1980s, with the SFRY economy suffering hyperinflation. The banking
and monetary systems were on the verge of collapse and the SFRY had
to resort to emergency measures. Among other developments, legislation
imposing restrictions on the repayment of foreign currency deposits
to individuals was introduced (see section 71 of the Foreign Exchange
Transactions Act).

32. 1989 was a year
of reforms for the SFRY in which many legislative, institutional and
structural adjustments were made in preparation for transforming the
socialist planned economy into a market-oriented one (the so-called
Marković reforms, named after the then Prime Minister).

33. One of the linchpins
of the transformation was a fundamental reform of the banking system,
carried out in accordance with the Banks and Other Financial Institutions
Act (Official Gazette no. 10/89). The banks were to be transformed from
associated and basic banks into joint stock companies.

34. In 1988, 1989
and 1990 the SFRY assumed liability for the foreign-currency related
losses and payment of the foreign-currency deposits with the NBY by
converting the Foreign Exchange-rate differences into public debt. Since
in 1991 the servicing of public debt was not regulated, the NBY passed
a resolution granting banks special liquidity loans in order to enable
withdrawals of foreign-currency deposits. In addition, the amount of
foreign-currency that could be withdrawn was further restricted.

35. This general situation
lasted until June 1991, when the process of disintegration of the SFRY
started. The whole process took place over several months, as the various
Republics proclaimed their independence.

(d) The Ljubljana Bank and the Zagreb Main
Branch

(i) Background

36. In 1988 the Ljubljana
Bank froze all its foreign-currency accounts.

37. On 19 December
1989 the Ljubljana Bank joint stock company (d.d. - delniška družba) was established in Ljubljana, in the then
Socialist Republic of Slovenia. The change was entered into the Register
of Companies on the same day and became effective on 1 January 1990.

38. Article 60 of
the Ljubljana Bank’s memorandum and articles of association of 19 December
1989 provided that the Ljubljana Bank would take over the rights, assets
and obligations of the Ljubljana Bank Head Office and, inter alia, the Basic Bank of Zagreb as a legal successor on
the day of its formation or registration on the Register of Companies.

39. On 29 December
1989, the Ljubljana Bank Basic Bank Zagreb was reregistered in the Zagreb
Commercial Court of First Instance as the Zagreb Main Branch (Glavna filijala Zagreb) with effect from 1 January 1990.

(ii) Matters in
dispute concerning the legal position and banking liabilities of the
Zagreb office of the Ljubljana Bank at the material time

(α) Events as related by the Slovenian Government

40. The Slovenian
Government maintained that the dissolution of the SFRY had prevented
the full conversion of the Ljubljana Bank Basic Bank Zagreb into the
Zagreb Main Branch. Thus, the status, operations, assets and liability
for deposits of the Zagreb Main Branch had become a succession issue.
During the two-year interim period under the Marković reforms, the
so-called main branches which had operated previously as basic banks
had had a sui generis status fundamentally different from that of a branch
as known to Western European legal systems.

(β) Events as related by the Croatian Government

41. As far as the
status of the Zagreb office was concerned, the Croatian Government argued
that at the material time the Zagreb Main Branch had existed as an organisational
part of the Ljubljana Bank, that there had been an institutional relationship
of dependency, and that the Ljubljana Bank’s liability for the Zagreb
Main Branch’s obligations had encompassed its total assets and been
unlimited.

2. Republic of Slovenia

42. On 25 June 1991
the National Assembly of the Republic of Slovenia enacted the Fundamental
Constitutional Charter on the Sovereignty and Independence of the Republic
of Slovenia and the Constitutional Law relating to its application (Official
Gazette no. 1/91). Thus Slovenia became independent.

(a) The Constitutional Law

43. By virtue of section
19(3) of the Constitutional Law, the Republic of Slovenia became guarantor
of all foreign-currency savings deposited with banks on Slovenian territory
at that date.

(b) Developments after independence

44. In October 1991
a new Slovenian currency was introduced, the Slovenian tolar (SIT).

45. On 4 February
1993 the Constitutional-Law guarantee was implemented by the Discharge
of Liability for Unpaid Foreign-Currency Deposits Act (Official Gazette
no. 7/93). Under section 2 of that Act, liabilities arising out of foreign-currency
deposits became part of the Slovenian public debt. Further implementing
legislation was passed in 1995.

46. Thus, foreign
currency deposited with banks on Slovenian territory became part of
the public debt in the form of bonds totalling approximately 1,500,000,000
German marks (DEM) and the account holders, regardless of their nationality
or of the location of the head office of their bank, were able to make
withdrawals as and when they chose.

47. On 11 March 1993
the Republic of Slovenia Succession-Fund Act (Official Gazette no. 10/93)
came into force. Under that Act, a number of Slovenia’s claims and
obligations vis-à-vis the SFRY, the NBY and other SFRY entities were
assigned to the Succession Fund.

48. On 28 June 1994
the Convention and Protocol No. 1 came into force with regard to Slovenia.

(c) The 1994 amendments to the 1991 Constitutional
Law

(i) Background

49. According to the
Slovenian Government, in 1991 the Ljubljana Bank represented 42.4% of
the Slovenian banking market. However, both before and after the dissolution
of the SFRY, the Ljubljana Bank accumulated substantial negative capital.
For this reason, the Government decided that rehabilitation measures
were urgently required to prevent the collapse of the Slovenian financial
system and such measures were taken in 1993. In that year, Slovenia
became the Ljubljana Bank’s sole shareholder.

50. The Ljubljana
Bank’s financial position was further jeopardised by two kinds of
succession risks in the absence of any agreement between the Successor
States: firstly, a claim by foreign creditors for USD 4.2 billion under
an agreement known as the New Finance Agreement (NFA); and, secondly,
the continued exposure to the SFRY’s liability for re-deposited foreign
exchange outside Slovenian territory.

51. The authorities
decided in 1994 to amend the 1991 Constitutional Law in order to protect
the public interest, as is reflected in the preamble to the Act (see
Relevant Domestic and International Law and Practice).

(ii) The legislation

52. On 27 July 1994
the National Assembly amended the 1991 Constitutional Law (Official
Gazette no. 45/94) so as to restructure the Ljubljana Bank by creating
a new and separate legal entity (section 22(č)): the New Ljubljana Bank
was formed as a joint stock company which took over the former bank’s
entire assets and liabilities on Slovenian territory. The former bank,
the Ljubljana Bank, retained its rights against and obligations towards
the SFRY (section 22(b)) and its former constituent republics: in particular,
full obligations in respect of the foreign-currency ordinary and deposit
accounts that were not guaranteed under section 19 of the 1991 Constitutional
Law, that is to say, those contracted outside Slovenian territory. The
rationale behind this decision was that the funds for repayment were
to become assets of the Ljubljana Bank as part of the succession arrangements.

53. That law also
laid down that the Ljubljana Bank would continue to deal with branches
and subsidiaries whose head offices were situated in other republics
of the territory of the SFRY and retain the rights to the corresponding
portion of the debt owed by the NBY in respect of the foreign-currency
savings accounts.

(d) The decision of the Slovenian Constitutional
Court

54. On 11 April 1996
the Constitutional Court (Ustavno sodišče) dismissed a constitutional initiative (ustavna pobuda) brought by a Croatian savings-account holder,
Mr Vukasinović, challenging the constitutionality of the 1994 Constitutional
Law, holding that it had no jurisdiction to hear it (see the Relevant
Domestic and International Law and Practice below).

(e) Developments subsequent to the decision
of the Slovenian Constitutional Court

55. On 5 July 1997
an amendment to the Republic of Slovenia Succession-Fund Act (Official
Gazette no. 40/97) came into force. It provided for a stay on any proceedings
directly or indirectly affecting legal relations with the SFRY pending
resolution of the succession arrangements. The proceedings were to be
reinstated ex officio once the succession arrangements had been resolved.
By virtue of section 15(č) of the Act, the statutory provisions were
binding on the Slovenian courts.

56. On 29 June 2001
the Agreement on Succession Issues was signed in Vienna by Bosnia and
Herzegovina, Croatia, the Federal Republic of Yugoslavia (later Serbia
and Montenegro), the Former Yugoslav Republic of Macedonia and Slovenia.
It entered into force on 2 June 2004 (see paragraphs 85-88 below).

57. On 23 July 2004 the Slovenian
Government informed the Court that new legislation in the form of the
Transformation of the Succession Fund of the Republic of Slovenia and
the Establishment of the Succession Agency of the Republic of Slovenia
Act had been passed which repealed the Republic of Slovenia Succession-Fund
Act.

58. On 21 February 2005 the
Court requested information from the Slovenian Government regarding
implementation of the aforementioned Act (see also paragraphs 11, 91,
191, 197 and 198 below).

59. The Slovenian
Government replied that that Act was in the process of being implemented.
In any event, further to the ratification of the Agreement on Succession
Issues and in conformity with Article 7 of Annex G to that Agreement
and with Article 8 of the Constitution(see Relevant Domestic and International Law and Practice”),
the proceedings relating to succession issues had resumed in the Slovenian
courts, since ratified and published international treaties took precedence
over statutory provisions and, in particular, section 15 (č) of the
Republic of Slovenia Succession-Fund Act. They produced a number of
decisions by the Slovenian courts ordering the resumption of such proceedings.

60. On 17 March 2005
the Constitutional Court ruled that the Transformation of the Succession
Fund of the Republic of Slovenia and the Establishment of the Succession
Agency of the Republic of Slovenia Act was unconstitutional since it
did not provide for the resumption of the proceedings that had been
stayed under the Republic of Slovenia Succession-Fund Act.

61. On 21 March 2006
further legislation – the Republic of Slovenia Succession-Fund and
the Republic of Slovenia Senior Representative for Succession Act –
was passed. Section 23 of that Act provided that any stay of proceedings
in the Slovenian courts relating to foreign currency deposited in a
commercial bank or a branch office of a commercial bank in any successor
State of the SFRY was to remain in force. Proceedings that had since
been resumed were to be stayed again until a solution was found to the
question of the guarantees to be provided by the SFRY or the NBY under
Article 7 of Annex C of the Agreement on Succession Issues (see paragraph
88 below).

3. Republic of Croatia

62. On 25 June 1991
the Parliament adopted a Declaration on the Sovereignty and Independence
of Croatia and enacted a Constitutional Act on the Sovereignty and Independence
of Croatia. On 8 October 1991 Croatia became independent.

63. In December 1991
a Croatian currency was introduced, the Croatian dinar, which was replaced
in 1994 by the Croatian kuna (HRK).

(a) Adoption of the SFRY’s finance regulations
and assumption of the guarantee for savings in Croatia

64. On 26 June 1991
the Act on the Applicability to Croatia of the SFRY’s Finance Regulations
was passed. By virtue of that Act, which entered into force on 8 October
1991 (Official Gazette no. 71/91), forty-two federal statutes and five
decisions of the Federal Executive Council concerning foreign-currency
savings were incorporated into Croatian law.

65. On 23 December
1991 the Government issued a Decree on the Conversion of Nationals’
Foreign-Currency Bank Deposits into the Croatian Public Debt (Official
Gazette no. 71/91). Under the Decree, savings that were deposited before
27 April 1991 with banks whose head office was situated in Croatia (“Croatian
banks”) or were transferred by Croatian nationals into Croatian banks
from other banks within 30 days became, subject to compliance with Articles
15 and 16 of the Decree, part of the Croatian public debt. Only Croatian
citizens were entitled to the conversion of their foreign-currency savings
into public debt.

66. The 1991 Decree
provided for payment of the foreign-currency deposits in national currency
in 20 half-yearly instalments starting on 30 June 1995 and bearing annual
interest of 5%. Further legislation was subsequently passed on this
subject.

67. According to the
Slovenian Government, about two thirds of the account-holders at the
Zagreb Main Branch transferred their former savings accounts to Croatian
banks, which in turn transferred their claims to Croatia. Thus, approximately
DEM 450,000,000 became Croatian public debt. 140,000 Croatian depositors
allegedly kept their accounts at the Zagreb Main Branch. The amount
of their deposits came to approximately DEM 300,000,000. Of the remaining
depositors, 96,000 have less than the equivalent of 30 Euros in foreign-currency
savings standing to their credit.

68. In 1991 a Decree
was adopted which prohibited the disposal or encumbering of real property
on Croatian territory owned by legal entities whose head office was
outside Croatia.

(b) Other developments

69. On 24 February
1996 the Croatian Payment Transaction Institute froze the Zagreb Main
Branch’s company account. On 14 July 2000 the Croatian authorities
closed the Zagreb Main Branch’s giro account.

4. Financial documents and information

70. On 25 October
2002 the Court invited Slovenia and Croatia to submit any documents
that might serve as evidence of the existence or absence of an institutional
and financial relationship of dependence between the Ljubljana Bank
and the Zagreb Main Branch.

71. On 5 December
2002 the Court additionally requested both Governments to provide further
information on whether or not the funds on deposit with the Zagreb Main
Branch had been effectively transferred to the Ljubljana Bank following
the Marković reform, and if so, the amounts transferred in Yugoslav
dinars and in hard currencies.

(a) The Ljubljana Bank’s Annual Reports

72. The Slovenian
Government submitted the Ljubljana Bank’s Annual Reports for the years
1989, 1990, 1991, 1992 and 1993. They claimed that no annual report
for the Zagreb Main Branch existed.

73. In the Ljubljana
Bank’s 1990 Annual Report, the assets and liabilities of the Zagreb
Main Branch were included for the first and only time.

74. On page 23 of
the Ljubljana Bank’s 1991 Annual Report, it is stated that the balance
sheets of the Ljubljana Bank and the Zagreb Main Branch could not be
consolidated because of the political situation in Croatia and in Bosnia
and Herzegovina. The Ljubljana Bank had little or no control over the
activities of its operations in those two countries and had little prospect
of being able to transfer any funds to Slovenia in the foreseeable future.
The same situation was noted in the 1992 and 1993 Annual Reports.

(b) The Zagreb Main Branch’s accounts

75. The Slovenian
Government submitted the Ljubljana Bank Basic Bank Zagreb’s balance
sheet for 1989 and the Zagreb Main Branch’s balance sheets for 1990,
1991, 1994 and 2001.

76. In 1991 the amount
of foreign-currency redeposited with the NBY came to 13.6 billion Croatian
dinars (USD 619 million), whereas foreign-currency deposits with the
Zagreb office came to 10.7 billion Croatian dinars (USD 490 million),
thereby confirming that 100% of the foreign-currency deposits with the
Zagreb office were subsequently redeposited.

77. The amount of
foreign-currency deposited by the Zagreb office with the NBY exceeded
its liabilities towards foreign-currency depositors. This was due to
the fact that some foreign-currency deposits had been paid out in YUD
or from the current inflow of foreign currency.No transfer of foreign-currency deposit funds from Zagreb
to Ljubljana had ever occurred.

78. According to the
Slovenian Government’s submissions of 1 October 2004, the books and
records of the Zagreb Main Branch as at 31 December 2003 showed that
its assets, including real estate, amounted to EUR 370 million and its
liabilities to EUR 168 million.

79. The Croatian Government
stated that further to the Marković reforms, the National Bank of Slovenia
became the regulatory authority for the Ljubljana Bank and that the
Zagreb Main Branch’s claims to foreign-currency deposits redeposited
with the NBY were transferred on that date to the National Bank of Slovenia
and the funds on deposit at the National Bank of Croatia transferred
from Zagreb to new accounts in Ljubljana.

80. However, the Croatian
Government stressed that the correct answer to the question concerning
the actual foreign-currency movements could be given only after comprehensive
and independent financial examination by an expert of the Ljubljana
Bank’s activities.

5. The succession negotiations between
the successor States of the SFRY

81. After the dissolution
of SFRY, the successor States were unable to negotiate a succession
treaty owing to the ongoing violence in the region and the claims made
by the then Federal Republic of Yugoslavia to be the sole successor
to the SFRY.

82. The succession
talks were first conducted within the framework of the International
Conference on Former Yugoslavia.

83. As no tangible
results were achieved through the International Conference on Former
Yugoslavia, the succession issues were included in the functions of
the High Representative in Bosnia and Herzegovina, who was appointed
pursuant to the General Framework Agreement for Peace in Bosnia and
Herzegovina signed on 14 December 1995.

84. In March 1996
Sir Arthur Watts was appointed Special Negotiator to assist the Successor
States in reaching an agreement. Numerous rounds of negotiations were
held.

85. On 29 June 2001
the Agreement on Succession Issues was signed by Bosnia and Herzegovina,
Croatia, the Federal Republic of Yugoslavia, the Former Yugoslav Republic
of Macedonia and Slovenia. Article 4 of the Agreement established a
Standing Joint Committee to monitor the effective implementation of
the agreement and to discuss issues arising in the course of its implementation.

86. The agreement
stipulated, inter alia, that the SFRY’s foreign financial assets should
be distributed to the successor States in the following proportions:
Bosnia and Herzegovina 15.5%, Croatia 23%, the Federal Republic of Yugoslavia
(now Serbia and Montenegro) 38%, the Former Yugoslav Republic of Macedonia
7.5% and Slovenia 16%.

87. By virtue of Article
2 § 3(a) of Annex C to the agreement, the SFRY’s financial liabilities
included “guarantees by the SFRY or its NBY of hard currency savings
deposited in a commercial bank and any of its branches in any successor
State before the date on which it proclaimed independence”.

88. Article 7 of Annex
C provided: “[g]uarantees by the SFRY or its NBY ... shall be negotiated
without delay taking into account in particular the necessity of protecting
the hard-currency savings of individuals. This negotiation shall take
place under the auspices of the Bank for International Settlements [‘the
BIS’]”.

89. In 2001 and in
2002, negotiations regarding hard-currency savings did take place under
the auspices of the BIS, but no solution was found.

90. All successor
States have ratified the Agreement, Croatia being the last country to
do so on 3 March 2004. It entered into force on 2 June 2004.

91. On 21 February
2005 the Court requested both the Slovenian and Croatian Governments
to inform it of any developments concerning the negotiations referred
to in Article 7 of Annex C. In addition, the Slovenian Government were
invited to inform the Court whether or not the Standing Joint Committee
had met or been convened (see paragraphs 11 and 58 above and 191, 197
and 198 below).

92. The Croatian
Government in their reply dated 30 March 2005 stated that no discussion
had taken place regarding the guarantee for hard currency savings which
would be relevant to the applicants’ situation.

93. The Slovenian
Government in their reply dated 31 March 2005 stated that the first
formal meeting of the Standing Joint Committee had not been convened
by the Former Yugoslav Republic of Macedonia within two months of the
entry into force of the Agreement as it should have been. They had repeatedly
urged the convening of the meeting so that the issue of the frozen bank
accounts could be discussed.

6. Bilateral negotiations between Slovenia
and Croatia

94. The unpaid foreign-currency
savings deposited with the Zagreb Main Branch have also been the subject
of frequent bilateral negotiations between Slovenia and Croatia, but
no solution has been found.

95. The Croatian Government
informed the Court that although negotiations on arbitration by the
International Monetary Fund(“the IMF”) were held in 1998, no arbitration agreement
was reached. According to the respondent Government, on 3 March 1999
both Prime Ministers had agreed that a list of succession issues should
be submitted to the IMF for consultative arbitration. Slovenia had sent
such a request in June 1999.

96. A bilateral Agreement
on the Regulation of Property Rights between Slovenia and Croatia entered
into force on 23 February 2000. Article 1 of this Treaty provides that
relations between Slovenia and Croatia concerning the Zagreb Main Branch
shall be governed by agreements to be concluded between the two States.

B. The facts of the individual cases

1. Application no. 44574/98, Mr Ivo Kovačić

(a) Deposit of savings and proceedings in Croatia

97. Mr Kovačić, who
was retired, held a foreign-currency savings account with the Zagreb
Main Branch. He was a client of the Zagreb office for over 30 years.

98. On 24 October
1984 the applicant and his wife signed a three-year automatically renewable
term-deposit agreement for DEM 66,771.12 earning 12.5% interest a year.
The agreementstipulated, inter alia, that the SFRY would guarantee their savings. The
last withdrawal from the account was made in August 1990.

99. On 10 September
1990 Mr Kovačić attempted to withdraw DEM 40,000 from his account. As
the term had not yet expired, the bank manager turned down his request
and suggested he should return after 24 October 1990, the date of maturity.
On 25 October 1990 the bank manager offered monthly payments of DEM
4,000. However, no payments were made.

100. Mr Kovačić and
his wife made repeated attempts to secure payment. They were informed
by the bank on 17 April 1991 that it was unable to make any payments,
as its relations with the NBY had not been determined and the Yugoslav
Foreign Exchange market was not functioning.

101. According to
a bank statement of 14 October 1993, the amount standing to the credit
of the account was then DEM 49,794.30.

102. Following the
bank’s refusal, the applicant brought a civil action against “the
Ljubljana Bank, Zagreb Main Branch” in the Zagreb Court of First Instance
(Općinski sud) claiming payment of his savings with interest.
On 2 December 1997 the court found, inter alia, that Mr Kovačić had inherited the foreign-currency
savings account in question from his wife, who had died in the meantime.
It ordered “the Ljubljana Bank, Zagreb Main Branch” to pay the applicant
within fifteen days the savings plus default interest; according to
the applicant, the sum came to a total of DEM 61,000.

103. The court alsoheld that, as the bank’s head office was not on Croatian
territory, the provisions of the Decree on the Conversion of Nationals’
Foreign-Currency Bank Deposits into Croatian Public Debt could not apply,
as Mr Kovačić had not transferred his deposits to a Croatian bank.
On 22 April 1998 the ruling became final and enforceable.

104. Mr Kovačić then
made an application for execution of that decision to the Zagreb Court
of First Instance, which issued a warrant of execution in the applicant’s
favour on 1 October 1998. The Zagreb Court of First Instance later stayed
the execution proceedings.

105. In 1998 Mr Kovačić
attempted to withdraw his funds, firstly, from the Zagreb Main Branch
and, subsequently, from the Ljubljana Bank Head Office in Ljubljana.
On 6 July and on 14 September 1998 he was informed by bank officials
that the bank had no funds and the account was frozen.

(b) Proceedings in Slovenia

106. On 7 December
1998 Mr Kovačić made an application to the Ljubljana District Court
(Okrožno sodišče) seeking a declaration regarding the extent
to which the Croatian judgment of 2 December 1997 was enforceable. On
21 June 1999 the District Court authorised him to enforce the Croatian
judgment. However, Mr Kovačić has not sought to enforce the judgment
of 2 December 1997 in the Slovenian courts.

(c) Subsequent proceedings in Croatia

107. On 24 December
2001 Mr Kovačić sought the registration of a charge over land in Osijek
(Croatia) belonging to the Zagreb Main Branch.

108. On 5 March 2003
the Osijek Court of First Instance granted his application. On appeal,
on 5 June 2003 the Osijek Court of Appeal (Županijski sud) upheld that judgment. It also held that with
the entry into force of the Agreement on the Regulation of Property
Rights between Slovenia and Croatia (see paragraphs 96 above and 170
and 171 below) and a subsequent decision which was adopted on 27 April
2002, the ban on disposing of the real property belonging to the Ljubljana
Bank was lifted.

109. In 2003 42 individuals,
includingMr Kovačić and Mr Mrkonjić, lodged requests for the seizure
and sale of real estate owned by the Ljubljana Bank.

110. On 17 July 2003
Mr Kovačić obtained a warrant of execution for the amount of DEM 49,794.30
(EUR 25,459.42) plus the interest in arrears from 1 January 1992 until
payment and the costs of the proceedings for obtaining the charging
order in the amount of HRK 2,967.42 (EUR 406,49) and the costs of the
subsequent enforcement proceedings.

111. On 30 March 2004
the Zagreb Main Branch’s assets were liquidated for HRK 3,903,000
(EUR 534,657.53) in the enforcementproceedings started by a Croatian savings-account holder,
Mr B. Various sets of proceedings were joined to those proceedings.
A ruling was handed down on 9 April 2004.

112. On 24 May 2004
the proceeds of sale were deposited with the Osijek Court of First Instance.
On 15 July 2004 a hearing on the division of the proceeds of sale was
held at the Osijek Court of First Instance.

113. On
20 July 2004 the Osijek Court of First Instance rendered a decision
dividing up the proceeds of sale. Mr Kovačić was awarded HRK 291,306.60
(EUR 39,905) (for the main debt and the costs) and Mr Mrkonjić HRK 180,515.72
(EUR 24,728) (for the main debt and costs), both payable into Mr Žugić’s
account. They were both also awarded costs for the enforcement proceedings.A number ofthe judgment
creditors, including the two applicants, lodged an appeal against that
decision in respect of the court fees (see paragraph 139 below).

114. On 21 October
2004 the Osijek Court of Appeal quashed the decision and remitted the
case.

115. On 28 February
2005 a hearing was held. On 8 April 2005 the Osijek Court of First Instance
gave a new decision concerning the division of the proceeds of sale.

116. The relevant
parts of that decision read:

“The Osijek Court of First Instance ... decided:

I. It is established that the real property recorded
in the Osijek cadastral municipality land registry .... was sold ...
for the amount of HRK 3,903,000 [EUR 534,657.53].

II. The costs of the enforcementproceedings shall be paid out of the amount obtained by the
sale as follows:

In the aggregate, the compensation for the costs
of the enforcement proceedings totals HRK 404,193.80. [EUR 55,369].
To this amount should be added ... the amount of HRK23,180 [EUR 3,175] to the judgment creditors represented by
the attorney Milivoje Žugić [for the appellate proceedings] ...

III. The following claims shall be settled from
the proceeds of sale:

...

18. Ivo Kovačić from Zagreb – the claim referred
to in the writs of execution nos. I-Ovr-186/02 and I-Ovr128/02 for the
part relating to court fees in the amount of HRK 2,967.42 [EUR 406] payable
to the attorney Milivoje Žugić from Zagreb’s giro account ... with
the Economic Bank, and the main claim in the amount of HRK 288,339.18
[EUR 39,498.50], which together total HRK291,306.60 [EUR 39,905].”

117. The applicants
appealed against that decision, again on the ground that they were entitled
to a higher award of costs. On 7 July 2005 the Osijek Court of Appeal
dismissed the appeal. The decision of 8 April 2005 thus became final.

118. On 20 July 2005
Mr Kovačić and Mr Mrkonjić received payment of their foreign-currency
deposits in full, including the costs awarded.

2. Application no. 45133/98, Mr Marjan
Mrkonjić

(a) Deposit of savings and proceedings in Croatia

119. Mr Mrkonjić holds
a foreign-currency savings account at the Zagreb Main Branch.

120. On 18 July 1984
he made a payment into the account. On 18 July 1987 he signed an automatically
renewable three-year term agreement for a deposit of 26,754.26 Swiss
francs (CHF)earning 12.5% interest a year.

121. On 2 May 1993
he closed the account by notice in writing but was unable to withdraw
the remaining balance. According to a bank statement of 30 July 1993,
the amount of his savings plus accrued interest at that time came to
CHF 31,265.92.

122. On 30 July 1993
Mr Mrkonjić brought a civil action in the Croatian courts to recover
his savings plus interest. On 23 August 1994 the Zagreb Court of First
Instance ordered “the Ljubljana Bank, Zagreb Main Branch” to pay
him the money due, namely CHF 31,265.92, plus default interest. The
Zagreb Main Branch subsequently appealed. Its appeal was dismissed on
12 September 1995 by a court of appeal.

123. According to
Mr Mrkonjić, on 28 December 1995 he withdrew part of his savings (CHF 7,850.07)
from his account.

124. On 23 July 1997
the Zagreb Main Branch paid Mr Mrkonjić part of the principal together
with court fees.

(b) Attempts by the applicant to withdraw his
savings

125. In 1998 Mr Mrkonjić
wrote several letters to the Ljubljana Bank in Slovenia asking to be
allowed to withdraw his money.

126. On 10 November
1998 a bank official informed him that his money had been deposited
with the NBY and that immediately after Slovenian and Croatian independence,
the bank’s access to the deposits in Belgrade had been suspended.
Slovenia and Croatia were attempting to find a solution to outstanding
issues, among which were the “old savings accounts”.

127. On 9 December
1998 Mr Mrkonjić was informed by the bank official that Slovenia and
Croatia had agreed that the problem of the “old savings accounts”
would be resolved by international arbitration. He was given the same
information on 18 January 1999 and 3 January 2000.

128. In 2000 and 2001
Mr Mrkonjić again made several requests to the Ljubljana Bank and the
Zagreb Main Branch for the withdrawal of his money. By letters of 4
April 2000, 20 and 22 February, 26 June and 16 July 2001, bank officials
informed him that no solution had been found.

129. On 12 February
2001 Mr Mrkonjić requested the registration of a charge over land belonging
to the Zagreb Main Branch in Osijek to secure the payment of his outstanding
debt amounting to CHF 26.845,61 with interest. His request was granted
on 12 March 2002 by the Osijek Court of First Instance, but the Osijek
Court of Appeal overturned that judgment on 25 April 2002. However, on
27 February 2003, the Supreme Court reinstated the first-instance judgment.

130. Finally, a bank
statement dated 14 April 2004 indicates that the amount standing to
Mr Mrkonjić’s credit on the savings account on that date amounted,
with accrued interest, to CHF 28,562.14.

(c) The “Agreement for the Assignment of
a Claim”

131. On 29 April 2004
Mr Mrkonjić informed the Court that two days earlier he had withdrawn
Mr Žugić’s authority to represent him.

132. In addition,
he sent a copy of an “Agreement for the Assignment of a Claim” under
which he had assigned to Mr Žugić his outstanding claim against the
Zagreb Main Branch, namely CHF 28,562.14, with interest and the costs
of the proceedings. In return, Mr Žugić had undertaken to pay 70% cent
of that amount to the applicant by a certain date. Mr Mrkonjić’s reason
for withdrawing Mr Žugić’s authority and cancelling this agreement
was that the latter had failed to pay him the money due by the agreed
date.

133. On 20 August
2004 the Court requested Mr Žugić’s comments on the information
received from Mr Mrkonjić.

134. On 8 September
2004 Mr Žugić replied that that he believed that he still had instructions
to represent Mr Mrkonjić since the latter had not withdrawn his authority
to act. He added that the agreement had not become effective since it
had been rescinded by mutual consent.

135. On 10 November
2004 the Economic Bank informed Mr Mrkonjić that it was unable to deny
Mr Žugić access to the funds paid into his account, since Mr Mrkonjić
had previously given him authority.

136. On 6 December
2004 Mr Mrkonjić appointed Mr Nogolica as his representative in the
proceedings before the Court.

137. On 18 March 2005
Mr Mrkonjić informed the Court that he had reinstated Mr Žugić as
his representative.

(d) Enforcement proceedings in Croatia

138. In 2003 42 individuals,
includingMr Mrkonjić, lodged requests for the seizure and sale of
real estate owned by the Ljubljana Bank. Mr Mrkonjić’s execution request
was joined to the enforcement proceedings already pending in the Osijek
Court of First Instance. In the course of those proceedings, the Zagreb
Main Branch’s assets were liquidated on 30 March 2004 (see paragraph
111 above).

139. On
20 July 2004 the Osijek Court of First Instance rendered a decision
dividing up the proceeds of sale. Mr Mrkonjić was awarded HRK 180,515.72
(EUR 24,728) for the main debt and the costs to be paid into Mr Žugić’s
account. He was also awarded costs for the enforcement proceedings,
but lodged an appeal against that decision in respect of the court fees(see paragraph
113 above).

140. On 4 November
2004 the Ljubljana Bank representativeinformed Mr Mrkonjić that the monies
had been deposited with theOsijek Court of First Instance but that
the execution proceedings were still pending.

141. On 8 April 2005
the Osijek Court of First Instance issued a new decision on the division
of the proceeds of sale. Mr Mrkonjić, represented by Mr Žugić, lodged
an appeal against that decision on the ground that he was entitled to
a higher award of costs. On 7 July 2005 the Osijek Court of Appeal dismissed
the appeal. The decision of 8 April 2005 thus became final.

142. The relevant
parts of that decision read:

“The Osijek Court of First Instance ... decided:
...

II. The costs of the enforcementproceedings shall be paid out of the amount obtained by the
sale as follows:

9. Marjan Mrkonjić from Basel – the claim
referred to in writ of execution no. I-Ovr-125/01 for the part relating
to court fees in the amount of HRK 10,132.66 [EUR 1,388], payable to
the attorney Milivoje Žugić from Zagreb’s giro account ... with
the Economic Bank, and the main debt in the amount of HRK 170,383.06
[EUR 23,340], which together total HRK 180,515.72 [EUR 24,728].

...”

143. On 20 July 2005
Mr Mrkonjić received payment in full of his foreign-currency deposits,
including the costs awarded.

3. Application no. 48316/99, Mrs Dolores
Golubović

(a) The applicant’s savings

144. Mrs Golubović,
who was retired, held a foreign-currency savings account at the Zagreb
Main Branch as the heir of the original account-holder, Mr Ostoje Mejić,
by virtue of a decision of the Karlovac Court of First Instance of 20
February 1998. That decision is final and enforceable.

145. On 6 October
1994 the amounts in Mr Mejić’s first savings book were recorded as:
DEM 31,065.59, CHF 4,468.50 and 2,897.60 Austrian schillings (ATS). The
amounts recorded in Mr Mejić’s second savings book at 31 December
1993 were: DEM 5,307.54, USD 13,074.44, CHF 904.94, ATS 6,480.51 and 167,146
Italian lire (ITL). According to the applicant, those sums had been
paid in between 1986 and 1990.

146. On 29 May 2001
the Zagreb Main Branch issued a savings book in the applicant’s name,
further to the Karlovac Court of First Instance’s decision of 20 February
1998. The deposits, including accrued interest, then came to DEM 39,085.45,
USD 14,092.89, CHF 5,627.59, ATS 10,077.41 and ITL 193,495.

(b) Other information submitted by the applicant

147. Mrs Golubović
maintained that the Ljubljana Bank had advised the Croatian savings-account
holders in 1992 to limit their withdrawals to DEM 500.

148. On 3 November
1998 a bank official at the Zagreb Main Branch informed her that all
hard-currency accounts had been frozen and that no payments could be
made. He confirmed that the Croatian courts had jurisdiction to hear
claims but said that judgments were not being enforced owing to the
Croatian branch’s financial difficulties. The Slovenian and Croatian
Governments were seeking a solution to the problem.

“The National Bank of Yugoslavia shall be bound,
at the request of an authorised bank, to accept citizens’ Foreign
Exchange deposits held in accounts at such authorised bank, and at the
same time to grant the authorised bank an interest-free credit in the
amount of the dinar counter value of the foreign exchange deposited.”

“(1) Domestic natural persons may keep foreign
currency in a foreign-currency ordinary or deposit account at an authorised
bank and use it for making payments abroad, in accordance with the provisions
of this Act.

...

(3) Foreign currency in foreign-currency ordinary
or deposit accounts shall be guaranteed by the Federation.

(4) The conditions and procedure applicable to
the obligations arising under the guarantee shall be regulated by a
separate federal law.”

Section 71

“(1) Nationals may sell convertible currencies
to an authorised bank or other authorised exchange office or deposit
such currencies in a foreign-currency ordinary or deposit account at
an authorised bank.

(2) Foreign currency kept in foreign-currency
ordinary or deposit accounts may be used by nationals to pay for imported
goods or services for their own and close relatives’ needs, in accordance
with the Foreign Trade Act.

...

(4) Foreign currency referred to in subsection
2 of this section may be used by nationals for the purchase of convertible
bonds, to make testamentary gifts for scientific or humanitarian purposes
in Yugoslavia or to pay for life insurance with an insurance company
in Yugoslavia.

(5) The National Bank of Yugoslavia shall regulate
the operation of the foreign-currency ordinary or deposit accounts of
Yugoslav nationals and corporations and foreign nationals and corporations.”

“The National Bank of Yugoslavia, in accordance
with federal law, shall guarantee dinar-savings deposits on citizens’
current accounts in the Post Office Savings Bank and other banks, and
the Federation shall guarantee foreign-currency savings deposits and
funds in foreign-currency accounts of domestic and foreign natural persons...”

“Statutes and regulations must comply with
generally accepted principles of international law and with treaties
that are binding on Slovenia. Ratified and published treaties shall
be applied directly.”

Article 22

“Everyone shall be guaranteed equal protection
of rights in any proceedings before a court and before any State or
local authority or bearer of public authority which determines his or
her rights, duties or legal interests.”

Article 33

“The right to own and inherit private property
shall be guaranteed.”

Article 153, § 2

“Statutes must conform to generally accepted
principles of international law and international treaties currently
in force and ratified by the National Assembly and regulations and other
general provisions must also conform to other ratified international
treaties.”

Article 160

“The Constitutional Court shall have jurisdiction
to decide the following matters:

(i) the conformity of statutes with the Constitution;

(ii) the conformity of statutes and other provisions
with ratified international agreements and general principles of international
law;

Unless otherwise provided for by law, the Constitutional
Court shall hear a constitutional appeal only if legal remedies have
been exhausted. The Constitutional Court shall decide whether a constitutional
appeal is admissible for adjudication on the basis of statutory criteria
and procedures.”

153. Section 21 §
1 of the Constitutional Court Act provides that the Constitutional Court
has jurisdiction, among other matters, to decide on the conformity of
statutes with the Constitution, ratified international agreements and
customary international law.

154. Individuals have
direct access to the Constitutional Court. In particular, they may initiate
proceedings for review of the constitutionality and legality of legislative
measures and other general acts. Section 24 confers on individuals who
have a legal interest in doing so the right to lodge a constitutional
initiative (ustavna pobuda).

155. The Constitutional
Court also has jurisdiction to determine complaints of breaches of human
rights and fundamental freedoms in individual cases. Under section 50,
any person may lodge a constitutional appeal (ustavna pritožba) if he believes that an individual act of
a State, local or statutory authority has violated his or her human
rights or fundamental freedoms.

“The Republic of Slovenia shall assume the
obligations borne by the SFRY until the entry into force of this law
to guarantee foreign-currency deposits in ordinary or deposit foreign-currency
accounts in banks on the territory of the Republic of Slovenia in accordance
with the statement of current liabilities.”

“Considering the reluctance of certain other
States that have emerged on the territory of the former Socialist Federal
Republic of Yugoslavia (hereinafter referred to as the ‘former SFRY’)
and the banks based in those States;

Whereas practical and legal considerations arising
from the war on part of the territory of the former SFRY, international
sanctions imposed on the so-called FRY (Serbia and Montenegro) and the
breakdown, as a result of efforts to finance the war of aggression on
a part of the territory of the former SFRY, of the financial and economic
systems in some States that have emerged on the territory of the former
SFRY mean that it is currently impossible for the agreement on legal
succession and on the assumption of the obligations and claims of the
former SFRY and the legal entities on its territory to be put into effect
and seriously jeopardize its immediate future;

And whereas the enforcement of the claims of
foreign creditors and entities of the so-called FRY (Serbia and Montenegro)
who have become creditors following the purchase of such claims in accordance
with the New Financing Agreement (hereinafter referred to as the ‘NFA’),
which makes banks based in the Republic of Slovenia jointly and severally
liable for the repayment of the full debt, would seriously jeopardize
the financial and economic system of the Republic of Slovenia;

And with the purpose of finding, through negotiations
with foreign creditors, a fair solution to the assumption of an adequate
share of the state debts of the former SFRY in cases in which the direct
beneficiary may not be established...”

Section 22(b)

“ The Ljubljana Bank d.d., Ljubljana and the
Maribor Credit Bank, d.d. Maribor shall transfer their respective businesses
and assets to the new banks created hereunder.

(iii) full liability for foreign-currency ordinary
and savings accounts not guaranteed by the Republic of Slovenia under
section 19 hereof;

(iv) liabilities to the National Bank of Yugoslavia
and foreign creditors that were guaranteed by the SFRY and the resources
for which have been used by the ultimate beneficiaries from other republics
within former Yugoslavia;

(v) the claims related thereto.

The Ljubljana Bank d.d., Ljubljana shall maintain
its links with the existing branches and subsidiaries of Ljubljana Bank
d.d. based in the other republics on the territory of the former SFRY,
but shall retain the corresponding share of claims against the National
Bank of Yugoslavia in respect of foreign-currency savings accounts.”

Section 22(c)

“The competent court shall of its own motion
record:

(i) the Bank and Savings-Bank Rehabilitation Agency
of the Republic of Slovenia as the owner and administrator of the Ljubljana
Bank d.d., Ljubljana, Trg republike 3, and the Maribor Credit Bank d.d.,
Ljubljana, Trg republike 3;

(ii) the commercial activity as being the administration
of the remaining assets.”

Section 22(č)

“Two banks shall be formed on the date this
law enters into force:

Their trade names shall be:

(i) the New Ljubljana Bank d.d., Ljubljana, Trg
republike 2; and

...

The managers of the new banks shall draw up a
final statement of the assets and liabilities of the banks referred
to in section 22(b) of this constitutional law as of the date on which
it enters into force. The statement shall include liabilities to the
National Bank of Yugoslavia and foreign creditors arising out of dealings
with persons from the former SFRY, and the corresponding assets.

... ”

Section 22(f)

“The Republic of Slovenia and the new banks
shall not recognise debt due to foreign creditors to whom United Nations
sanctions apply in accordance with UN Security Council Resolutions Nos.
757/1992 and 820/1993 [i.e. those in the Federal Republic of Yugoslavia
(Serbia and Montenegro) and certain areas in Bosnia and Herzegovina
and Croatia].

Even if the UN sanctions referred to in the preceding
paragraph are lifted, until a full or partial agreement on the legal
succession to the former SFRY has been signed and ratified, or an arrangement
made with foreign creditors, no claims or legal or other proceedings
brought with a view to seizing bank property shall have any legal effect
or be recognized by the courts of the Republic of Slovenia.”

“This Act governs the procedure for discharging
liabilities arising out of unpaid foreign-currency deposits with banks
on the territory of the Republic of Slovenia which the banks have deposited
with the National Bank of Yugoslavia.”

Section 2

“The banks’ liabilities arising out of foreign-currency
deposits ... shall become debt of the Republic of Slovenia.

... ”

Section 3

“The banks’ claims against the National Bank
of Yugoslavia concerning the amount of unpaid foreign-currency deposits
shall be transferred to the Republic of Slovenia.”

“In order to realise the claims and discharge
the liabilities of the Republic of Slovenia and natural and juristic
persons on the territory of the Republic of Slovenia as part of the
process of division of the rights, assets and liabilities of the SFRY,
the Republic of Slovenia Succession Fund to Establish Rights and Obligations
in the Succession Process (hereafter ‘the Fund’) is hereby created.”

Section 15

“Natural and juristic persons who at the date
this Act enters into force have unpaid claims against or liabilities
to subjects of the former Federation may enter into an agreement with
the Fund transferring their unpaid claims and liabilities to the Fund,
or alternatively give the Fund authority to recover claims and to discharge
liabilities in their name and on their behalf.”

“If court proceedings or execution proceedings
are pending against persons based or domiciled [on the territory] of
the Republic of Slovenia and the claimant or the creditor is based or
domiciled [on the territory] of the Republic of Slovenia, a former SFRY
republic or a third country and the claim arises out of a legal transaction
or enforceable judicial decision, the court shall stay the court proceedings
or execution proceedings of its own motion.

Court proceedings commenced after this Act comes
into force shall be stayed from the date of service of the claim on
the defendant.

Execution commenced after this Act comes into
force shall be stayed before a decision has been taken on the application
for enforcement, with effect from the date of reception by the court
of the notice referred to in section 15(g) of this Act.”

Section 15(d)

“The court shall also make an order ... in
cases in which natural or juristic persons have not acted, or were not
entitled to act, in accordance with section 15, and the claim relates,
directly or indirectly, to legal relations with entities of the former
Federation or to status liability of entities of the former SFRY.”

Section 15(e)

“Proceedings that have been stayed under section
15(č) of this Act shall be reinstated by the court of its own motion
once [a new] Act ... has come into force.”

Section 15 (g)

“For the purpose of establishing whether the
circumstances referred to in sections 15(č), 15(d) ... apply, the court
shall obtain of its own motion the opinion of the Fund beforehand and
base its decision on that opinion.

“(1) Stays of proceedings in the courts in the
Republic of Slovenia concerning hard currency deposited in a commercial
bank or any of its branches in any successor State of the former SFRY
that have been issued pursuant to the Republic of Slovenia Succession-Fund
Act ... shall remain in force. Any proceedings referred to in the previous
sentence that have already resumed shall be further stayed or suspended.

(2) Proceedings referred to in the previous paragraph
shall be stayed or suspended until a solution has been found to the
question of the assumption of the guarantee of the SFRY or the NBY for
such deposits pursuant to Article 7 of Annex C to theAgreement on Succession Issues and shall, upon the fulfilment
of that condition, resume automatically ...”

9. Case-law of the Slovenian Constitutional
Court

162. After finding
that he was unable to withdraw his savings from “the Ljubljana Bank
– Zagreb Main Branch”, a Croatian savings-account holder, Mr Vukasinović,
brought proceedings in the Constitutional Court challenging the constitutionality
of section 22(b) and (f) of the 1994 Constitutional Law amending the
1991 Constitutional Law.

163. On 11 April 1996
the Constitutional Court dismissed the proceedings, holding that it
had no jurisdiction, as the impugned statute was constitutional in nature
and thus fell outside the court’s jurisdiction. It added that one
of the features of communal life in the SFRY was foreign-currency deposits,
which were guaranteed by the NBY. The issue before it therefore concerned
the transition towards a new constitutional order in Slovenia that was
also one of the areas of discussion over the succession to the SFRY.

164. On 31 August
1999, a Croatian saver, Mr Perković, lodged a constitutional initiative
challenging the constitutionality of section 15(č) and (d) of the amended
Republic of Slovenia Succession Fund Act. On 8 March 2001 it ruled that
Mr Perković had standing and declared his initiative admissible.

165. In March 2000
another Croatian saver, Mrs Gaković, lodged a constitutional appeal
against a decision by the Ljubljana Regional Court (Okrajno sodišče) to stay the proceedings pursuant to section
15(č), paragraph 3 of the amended Republic of Slovenia Succession Fund
Act and a decision of the Ljubljana Higher Court upholding the stay.
On 30 May 2000 the Constitutional Court ruled that Mrs Gaković had standing
and declared her constitutional appeal admissible.

166. On 20 February
2003 the Constitutional Courtset aside the stay and remitted the proceedings to the Regional
Court. It held that Mrs Gaković’sright to a fair trial had been violated, as the stay had been
ordered solely on the basis of an opinion issued by the Republic of
Slovenia Succession Fund, without her being afforded an opportunity
to comment on it.

167. On 17 March 2005
the Constitutional Court ruled that the Transformation of the Succession
Fund of the Republic of Slovenia and the Establishment of the Succession
Agency of the Republic of Slovenia Act was unconstitutional since it
did not provide for the resumption of proceedings that had been stayed
pursuant to Section 15(č) of the Republic of Slovenia Succession-Fund
Act.

“This decree shall govern the procedural arrangements
and conditions for the conversion of nationals’ foreign-currency deposits
at banks established on the territory of the Republic of Croatia into
public debt of the Republic of Croatia on 27 April 1991 and for access
to such deposits.

For the purposes of this Decree ‘nationals’
foreign-currency deposits’ shall include:

(i) foreign-currency deposits of banks whose head
office is situated on the territory of the Republic of Croatia that
have been deposited with the National Bank of Yugoslavia as nationals’
foreign-currency savings; and

(ii) nationals’ deposits in foreign-currency
accounts or savings accounts with banks in Croatia that have been transferred
by a national from a bank that is not based on the territory of the
Republic of Croatia, in accordance with Articles 15 and 16 of this Decree.”

Article 2

“Foreign-currency deposits at banks in Croatia
deposited with the National Bank of Yugoslavia as citizens’ foreign-currency
savings and foreign-currency deposits transferred to banks in Croatia
under the provisions of Articles 15 and 16 of this Decree together with
accrued interest for the year 1991 calculated according to the structure
of the currency deposited shall be converted into public debt of the
Republic of Croatia.”

Article 4

“The Republic of Croatia shall issue bonds
to banks in Croatia in accordance with the provisions of this Decree
for the public debt referred to in Article 2 above.”

Article 6

“The bonds referred to in Article 4 of this
Decree shall be amortised in 20 half-yearly instalments, the first of
which shall be due on 30 June 1995.

The bonds shall be negotiable, payable to bearer
in DEM, and paid in domestic currency at the exchange rate applicable
on the date of payment.

They shall be made out in values of 100, 500
or 1,000 DEM.

Annual interest rates on bonds shall be 5%, to
be calculated and paid on 30 June and 31 December every year in domestic
currency at the exchange rate applicable on the payment date; interest
will start to run on 1 January 1992.”

Article 15

“Citizens who on 27 April 1991 had foreign-currency
savings, that is, foreign-currency funds in a foreign-currency account
with a bank based outside the territory of the Republic of Croatia but
which carried on business in the territory of the Republic of Croatia
may, within 30 days from the date this Decree enters into force, transfer
the deposits to a bank in Croatia.

...”

Article 16

“Banks in Croatia shall be obliged to accept
transfers of foreign-currency deposits made in accordance with Article
15 above and shall inform the bank concerned outside the territory of
the Republic of Croatia that the transfers have been made.

“This Agreement shall deal with the resolution
of property relations established before and after the State Contracting
Parties gained independence.

...

The resolution of relations relating to the Krško
Nuclear Power Plants and the Ljubljana Bank, Zagreb Main Branch shall
not be the subject of this Agreement, but shall be regulated by separate
agreement.”

171. The Agreement
entered into force on 23 February 2000.

2. Agreement on Succession Issues signed
in Vienna on 29 June 2001

172. The relevant provisions read:

Article 4

“(1) A Standing Joint Committee of senior representatives
of each successor State, who may be assisted by experts, is hereby established.

(2) This Committee shall have as its principal
task the monitoring of the effective implementation of this Agreement
and serving as a forum in which issues arising in the course of its
implementation may be discussed. The Committee may as necessary make
appropriate recommendations to the Governments of the successor States.

(3) The first formal meeting of the Standing Joint
Committee shall be convened, at the initiative of the Government of
the Republic of Macedonia, within two months of the entry into force
of this Agreement. The Committee may meet informally, and on a provisional
basis, at any times convenient to the successor States after the signature
of this Agreement.

(4) The Committee shall establish its own rules
of procedure.”

Annex C, Article 2

“...

(3) Other financial liabilities include:

(a) guarantees by the SFRY or its National Bank
of Yugoslavia of hard currency savings deposited in a commercial bank
and any of its branches in any successor State before the date on which
it proclaimed independence; and

(b) guarantees by the SFRY of savings deposited
before certain dates with the Post Office Savings Bank at its branches
in any of the Republics of the SFRY.”

Annex C, Article 7

“Guarantees by the SFRY or its NBY of hard
currency savings deposited in a commercial bank and any of its branches
in any successor State before the date on which it proclaimed its independence
shall be negotiated without delay taking into account in particular
the necessity of protecting the hard currency savings of individuals.
This negotiation shall take place under the auspices of the Bank for
International Settlements.”

Annex G, Article 7

“All natural and legal persons from each successor
State shall, on the basis of reciprocity, have the same right of access
to the courts, administrative tribunals and agencies, of that State
and of the other successor States for the purpose of realising the protection
of their rights.”

173. The agreement
entered into force on 2 June 2004.

E. Resolution 1410 (2004) of the Parliamentary
Assembly of the Council of Europe (text
adopted by the Standing Committee acting on behalf of the Assembly on
23 November 2004 (see Doc. 10135,
report of the Committee on Legal Affairs and Human Rights, rapporteur:
Mr Jurgens))

174. The relevant provisions read:

“Repayment of the deposits of foreign exchange
made in the offices of the Ljubljanska Banka not on the territory of
Slovenia, 1977-1991

1. The Parliamentary Assembly is seized of the
question of the non-repayment by the Ljubljanska Banka (LB) in Ljubljana,
Slovenia, of the foreign exchange deposited with the branches of the
LB in Zagreb, Sarajevo and Skopje over a period of more than ten years,
between 1977 and 1991, before the dissolution of the Socialist Federal
Republic of Yugoslavia (SFRY).

2. The depositors from Bosnia and Herzegovina,
Croatia and “the former Yugoslav Republic of Macedonia”, as successor
states of Yugoslavia, claim that Slovenia is liable to repay these deposits
because the head-office of LB is and was located in Slovenia. The smaller
and larger claims by some hundreds of thousands of depositors total
several hundred millions German Marks, including a very high percentage
of accumulated interest.

3. The Assembly is of the opinion that it is not
fair to keep the depositors waiting until the legal, economic and political
questions have been solved between the successor states which have guaranteed
these deposits.

4. The Assembly welcomes the fact that certain
groups of savers have received at least partial compensation from their
Governments: those who deposited their savings in LB offices in Slovenia
or in “the former Yugoslav Republic of Macedonia” and those who
accepted the Croatian Government’s limited offer to transform the
savings into Croatian national debt. It considers that similar solutions
should be offered to all those whose savings were lost in the collapse
of the banking system in the SFRY.

5. The Assembly does not consider it to be its
task to take sides in the legal dispute between Slovenia and some of
the savers who deposited their savings in Ljubljanska Banka offices
located in other former Yugoslav republics, a dispute which has been
brought before the European Court of Human Rights by a group of depositors
in Croatia.

6. The Assembly therefore considers that it is
primarily for the Court, and not the Assembly, to decide on the application
to the cases in point of the principle of protection against expropriation
guaranteed by the European Convention on Human Rights, if the Court
regards such claims to be admissible.

7. However, notwithstanding the decision of the
Court to declare two individual applications from Croatian depositors
admissible, the Assembly considers that the matter of compensation for
so many thousands of individuals would best be solved politically, between
the successor states, instead of an already overburdened Court. The
Assembly therefore:

(i.) appeals to the successor countries of the
SFRY to address without further delay the plight of the depositors of
hard-currency savings in former Yugoslav banks, many of whom lost access
to their modest life savings in the collapse of the banking system of
the SFRY;

(ii.) proposes to the four countries concerned
to set up a collective fund under the auspices of the Council of Europe
in order to compensate the depositors for the capital of their original
foreign currency savings, possibly with some compensation for inflation,
in order to help the savers, who have been deprived of access to their
life savings for more than ten years. The fund should be financed by
all four governments concerned, in principle proportionately to foreign
exchange deposits made on the territory of each of the countries. In
negotiating the precise burden-sharing arrangement between the successor
countries of the SFRY, due account should be taken of the following
factors, to the extent that they can be properly established:

(a.) actual hard currency transfers made to the
Ljubljana office of Ljubljanska Banka of savings deposited in offices
located in other republics and use of such funds for the economic development
of Slovenia;

(b.) the possibility offered, or not, to Ljubljanska
Banka to pursue its banking activities in the other republics after
the breakdown of the SFRY, thus making it possible for the LB to recover
debts owed by clients for credits given;

(c.) the fact that compensation has already been
given to depositors by some states and that the claims of these depositors
have been taken over by those states;

(iii.) invites the European Union to examine the
possibility of making a contribution to the collective fund;

(iv.) instructs its Committee on Economic Affairs
and Development to study the modalities of setting up the above-mentioned
collective fund.”

175. The Court must first address the question
whether Mrs Miroslava Kovačić, Mrs Marina Mušić and Mr Zlatko Kovačić’s
have standing to pursue the application originally introduced by the
applicant Mr Ivo Kovačić, who died on 17 July 2004.

176. The late applicant’s next of kin,Mrs Miroslava Kovačić, Mrs Marina Mušić and Mr Zlatko Kovačić,
declared in July2004 that they wished to pursue their late husband’s and
father’s application before the Court. They subsequently relied on
a grant of probate issued by a notary public on 29September2004 under authority delegated by the Zagreb Court of First
Instance, by virtue of which they inherited the late applicant’s claims
against the Zagreb Main Branch. They therefore considered that they
had a legitimate interest in pursuing the application before the Court.

177. In various cases in which an applicant has
died in the course of the proceedings the Court has taken into account
the statements of the applicant’s heirs or of close members of his
family who have expressed the wish to pursue the proceedings before
the Court (see, for example, Deweer v. Belgium, judgment of 27 February 1980, Series A no.
35, pp. 19-20, §§ 37-38, Vocaturo v. Italy, judgment of 24 May 1991, Series A no. 206-C,
p. 29, § 2, and Malhous v. the Czech Republic (dec.), no. 33071/96, ECHR 2000-XII).

178. Regard being had to the fact that Mrs Miroslava
Kovačić, Mrs Marina Mušić and Mr Zlatko Kovačić have been confirmed
as the applicant’s lawful heirs under national law, the Court must
accordingly continue to examine the application at their request. However, Mr Kovačić
will continue to be referred to as the applicant for the purposes of
the examination of the case.

II. AS TO THE LOCUS STANDI OF MR IVO STEINFL

179. Secondly, the Court must address the question
of Mr Ivo Steinfl’s standing to pursue the application originally
introduced by the applicant Mrs Dolores Golubović who died in the course
of the proceedings on 15 October 2004.

180. Mr Steinflhas elected in December 2004 to pursue his late aunt’s application
before the Court. He relies on a grant of probate issued by a notary
public delegated by the Karlovac Court of First Instance on 24 November2004,
by which he was declared her sole heir under Mrs Golubović’s last
will dated 27June1999.The Court therefore holds that the deceased applicant’s
nephew has standing in the present case to continue the proceedings
in her stead. In line with its practice, the Court will continue to
refer to Mrs Golubović as the applicant.

III. ALLEGED VIOLATION OF ARTICLE
1 OF PROTOCOL No. 1 TAKEN ALONE AND IN CONJUNCTION WITH ARTICLE 14 OF
THE CONVENTION

181. The applicants complained of a violation
of Article 1 of Protocol No. 1, which reads:

“Every natural or legal person is entitled
to the peaceful enjoyment of his possessions. No one shall be deprived
of his possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of international
law.

The preceding provisions shall not, however,
in any way impair the right of a State to enforce such laws as it deems
necessary to control the use of property in accordance with the general
interest or to secure the payment of taxes or other contributions or
penalties.”

182. One of the applicants, Mr Kovačić, also
maintained that he had been the victim of discrimination in relation
to the enjoyment of his property rights, contrary to Article 14 of the
Convention, which reads as follows:

“The enjoyment of the rights and freedoms set
forth in the Convention shall be secured without discrimination on any
ground such as sex, race, colour, language, religion, political or other
opinion, national or social origin, association with a national minority,
property, birth or other status. ”

A. The parties’
and third party’s submissions

(a) The applicants

183. On 20 August 2004, in view of the agreement
whereby Mr Mrkonjić had assigned his outstanding claim against the Zagreb
Main Branch to his representative Mr Žugić in return for the immediate
payment of a portion of the claim (see paragraph 132 above), the Court
asked Mr Žugić, who was representing also Mr Kovačić, whether he
had concluded with the latter a similar agreement. On 8 September 2004
Mr Žugić replied that no such agreement had been signed with the Kovačić
family.

184. On 21 February
2005, following Mr Kovačić’s death, the Court requested his widow
Mrs Kovačić (see paragraphs 11, 14, 58, 91 above and 185 and 212 below)
to inform it of the position in the enforcement proceedings and whether
sheconsidered the agreement that had been concluded between Mr
Mrkonjić and Mr Žugić to be of any relevance to her own situation. On
21 March 2005 Mrs Kovačić replied that she was not acquainted with
Mr Mrkonjić’s case, but that in her view it was not relevant to her
own position.

185. On 21 February
2005 the Court requested also Mrs Golubović whether she had taken any
steps with a view to realising her claims in Croatia. It also enquired
whether the agreement concluded between Mr Mrkonjić and Mr Žugić was
of any relevance to her own situation (see paragraphs 11, 14, 58, 91,
184 below and 212 above).

186. On 24 March 2005,
the applicant’s representative informed the Court that neither Mrs
Golubović nor her legal successor had brought proceedings in the Slovenian
or Croatian courts against either the Ljubljana Bank Head Office or
the Zagreb Main Branch. He added that the arrangement between Mr Mrkonjić
and Mr Žugić was not relevant to Mrs Golubović’s situation.

187. Moreover, on
19 September 2005, in reply to the Court’s request of 30 August 2005,
Mr Žugić confirmed on behalf of Mr Kovačić and Mr Mrkonjić that
they had received full payment of their savings (see paragraphs 118
and 143above). The applicants stressed that this had occurred as
a result of the enforcement proceedings. It could not be claimed that
either the Ljubljana Bank or the New Ljubljana Bank had voluntarily
executed the judgments in their favour. They had been executed over
property of the “old” Ljubljana Bank which happened to be located
on Croatian territory.

188. Moreover, not
all of the claims of the successors of Mr Kovačić and Mr Mrkonjić
had been satisfied. In fact, the just satisfaction claims in respect
of the non-pecuniary damage for the suffering sustained by the two applicants
because of the violation of their right to property remained open.

189. They added that
the Court should not take into account the facts relied on by the respondent
Government which had occurred after 9 October 2003, the day on which thehearing before the Court had been held.

190. In any event,
the fact that the information concerning the payment had been made available
to the respondent Government and eventually to the New Ljubljana Bank
confirmed that the latter had been established in order to allow the
obligations towards the Croatian savers to be evaded in a discriminatory
way. In fact, it proved that the Ljubljana Bank and the New Ljubljana
Bank was the same legal person, operating under a new name.

191. Finally,
Section 433 of the Slovenian Code of Obligations 2001would make the New Ljubljana Bank, as the legal successor
to the Ljubljana Bank, liable for its debts, including those of the
Zagreb Main Branch, once the 1994 Constitutional Law was repealed. The
problem of the “old savings” could not be solved as long as that
Law had not been rescinded.

(b) The respondent Government

192. As in their previous submissions, in their
additional submissionsof 23 July 2004 the respondent Government argued that through
the 1991
Constitutional Lawand its implementing legislation,Slovenia had taken responsibility for an equitable proportion
of the former SFRY’s guarantee for foreign-currency deposits, regardless
of the nationality of the depositor or the location of the headquarters
of the bank with which the deposit had been made.

193. Moreover, through loans awarded on the basis
of foreign-currency deposits with the Zagreb Main Branch, investments
had been made on Croatian territory before the dissolution of the SFRY
which continued to benefit Croatia. In addition, after the dissolution
of the SFRY, the Zagreb Main Branch had not been able to generate the
assets needed to service its debt to foreign-currency depositors, precisely
because of a series of actions taken by the Croatian Government in the
exercise of their jurisdiction over banks and property located on Croatian
territory.

194. The resolution of the Parliamentary Assembly
on the “Repayment of the deposits of foreign exchange made in the
offices of the Ljubljana bank not on the territory of Slovenia”, which
was then in its drafting stage but was adopted on 23
November 2004,and the Explanatory Memorandum prepared by the Rapporteur
Mr Jurgens confirmed that the territorial principle should govern the
distribution of the SFRY guarantee. By applying the territorial principle,
Slovenia had therefore fulfilled any obligation it might have had under
the applicable customary international law of State succession. Slovenia
was prepared to accept the establishment of a common fund with contributions
of all successor States to service the unpaid foreign-currency debt
of depositors.

195. Furthermore, under the laws of the former
SFRY, the Ljubljana Bank Head Office had not at any relevant time been
liable for the debts of the Ljubljana Bank Basic Bank Zagreb. Since
the conversion under the Marković reforms in 1989/90 from the Ljubljana
Bank Basic Bank Zagreb into the Zagreb Main Branch was never completed
due to the dissolution of the former SFRY, the latter had never become
dependent on the Ljubljana Bank.

196. The Explanatory Memorandum confirmed that
the Marković reforms could not be completed, that the Ljubljana Bank
had never been liable for debts contracted by the Ljubljana Bank Basic
Bank Zagreb and that in any event liabilities under the SFRY banking
system could not be converted into civil liabilities under the new systems.
The respondent Government added that even if a case could be made that
the branches had formally become dependent on the head office, it was
still not clear what that dependence would extend to pre-existing assets
and liabilities of the regionaloffices.

197. It followed that the applicants had failed
to establish in the first place that they had a claim against the Ljubljana
Bank which could have been affected by the 1994 Constitutional Law.
Since the 1994 restructuring did not extend to bank offices outside
Slovenian territory, assets and liabilities of the Zagreb Main Branch
were not affected and the applicants’ claims that Slovenia had interfered
with their right to peaceful enjoyment of their “possessions” were
unfounded.

198. Relying on their submissions at the hearing,
the Slovenian Government further maintained that the applicants could
and should have pursued their claims against the Zagreb Main Branch.
They stressed that within the framework of the enforcement proceedings
pending in the Osijek First Instance Court, the Zagreb Main Branch’s
real estate had been liquidated and the proceeds of sale deposited with
the court. The two applicants Mr Kovačić and Mr Mrkonjić, who had
initiated enforcement proceedings in the Osijek First Instance Court,
would shortly be receiving satisfaction of their claims through the
division of the proceeds of sale.

199. In any event, if the Court found that Slovenia
had restricted the applicants’ access to their deposits, such a restriction
was proportionate to the legitimate aim pursued, namely the prevention
of a systemic crisis, in the light of the fact that the applicants could
have obtained payment of their deposits in the near future.

200. This was confirmed by the Slovenian Government’s
extensive reply of 1 October 2004 to the applicants’ and the Croatian
Government’s submissions. In addition, the applicants’ claims did
not constitute “possessions” within the meaning of Article 1 of
Protocol No.1; nor could it be claimed that the applicants had any legitimate
expectation that the Zagreb Main Branch would not be in position to
service their foreign-currency deposits.

201. In any event, the Croatian allegations that
the 1994 Constitutional Law had de facto expropriated the applicants’ foreign-currency deposits
since it made them irrecoverable, should be rejected for non-compliance
with the six-month time-limit. The respondent Government also stressed
that the Zagreb Main Branch’s net assets were substantial, amounting
to EUR 370 million book values in 2003, and certainly exceeded the applicants’
claims.

202. They further stated that Slovenia had not
violated Article 14 read in conjunction with Article 1 of Protocol No.
1. Any differential treatment of foreign and domestic deposits that might
have existed was not based on nationality or any other ground mentioned
in Article 14. Even if the 1994 restructuring measures involved differential
treatment of deposits on Slovenian territory and deposits on Croatian
territory, which they did not, any such differences were based on the
objective criterion of the location of the foreign-currency deposits,
namely in Croatia.

203. Finally, on 25 July 2005 the Slovenian Government
informed the Court that Mr Kovačić and Mr Mrkonjić had received payment
of their foreign-currency deposits in full.

(c) The Croatian Government

204. In
their additional submissionsof 23 July 2004, the Croatian Government first referred to
their previous submissions. The legislative measures taken in 1994 by
the Slovenian authorities constituted an interference with the applicants’
rights to the peaceful enjoyment of their “possessions”, guaranteed
by Article 1 of Protocol No. 1. Since the applicants’ valid claims
against the Ljubljana Bank, based on the savings contracts, were concrete
and specified, they constituted “possessions” or at least a “legitimate
expectation” of their realisation. The Croatian Government argued
that the cases concerned de facto expropriation of the applicants’ “possessions”
and submitted that the rule contained in the first paragraph of Article
1 of Protocol No. 1, which forbids deprivation of “possessions”
except under specific conditions, should be applied.

205. Prior
to the enactment of the 1994 Constitutional Law, the applicants’ foreign-currency
deposits in the Ljubljana Bank were not a part of the Slovenian public
debt since they had not been deposited on Slovenian territory. They
remained therefore the bank’s active debt to the applicants. The bank
was not insolvent and remained in business. By the 1994 Constitutional
Law, the Slovenian State had nationalised all the assets of the Ljubljana
Bank and, although it had not rejected the applicants’ claims, it
had effectively made them unenforceable. This constituted de facto expropriation.

206. Since
the 1994 legislation did not only serve to protect the Slovenian financial
and economic system from speculative claims under the NFA but also to
protect a State-controlled bank from all claims from foreign creditors,
especially individual savers, such an aim could not be considered to
be legitimate. In any event, the measures were not proportionate since
an excessive burden had been placed on the applicants who wanted nothing
more than a secure bank in which to deposit their life savings. On the
contrary, the Ljubljana Bank had been aware of the business risk in
the political environment in which it was operating. In 1994, the Slovenian
State had shifted the business risk entirely to the savers. In addition,
the measures were not limited in time.

207. The
entry into force of the Agreement on Succession Issues had not changed
anything for the applicants. Their savings had remained irretrievable
and they had acquired no enforceable rights under it. The private legal
relationship between the bank and its savers was not the subject of
succession. In principle, only Annex G could be applied to that relationship.

208. As to the alleged
violation of Article 14 read in conjunction with Article 1 of Protocol
No. 1, it was not disputed between the parties that there had been a
difference in treatment between savers with the main branches of the
Ljubljana Bank and savers with the Ljubljana Bank, both in the assumption
of the Ljubljana Bank’s debt and its restructuring.

209. The
fact that the money had been physically deposited in a certain territory
made no difference given that free movement of capital had existed between
that territory and the territory where the head office of the financial
institution was located. In the SFRY, that possibility existed among
its former component republics. As to the restructuring of the Ljubljana
Bank in 1994, it was obvious that it had been undertaken with a view
to depriving foreign savers of their claims.

210. In
their response of 1 October 2004 to the Slovenian Government’s submissions,
the Croatian Government stated that the Draft Resolution of the Parliamentary
Assembly of the Council of Europe on the “Repayment of the deposits
of foreign exchange made in the offices of the Ljubljana bank not on
the territory of Slovenia” could not be used as evidence in the present
proceedings since it had not been adopted at the material time (see
paragraph 194 above). Moreover, the Parliamentary Assembly had not considered
it to be its task to take sides in the legal dispute between Slovenia
and the savers. The opinions expressed by the Rapporteur Mr Jurgens could
only serve as a basis for adopting the Resolution which might contribute
to a political solution to the problem.

211. As
to the documents that had been submitted relating to the enforcement
proceedings pending in the Croatian courts, they were relevant only
to the question of the admissibility of the applications, in particular
of the exhaustion of domestic remedies, on which the Court had already
given a decision. They had no bearing on the merits.

212. On 21 February
2005 the Court asked the Croatian Government whether they could confirm
the accuracy of the information provided by the Slovenian Government
and Mr Mrkonjić regarding the position in the enforcement proceedings
that had been issued by Mr Kovačić and Mr Mrkonjić (see paragraphs
11, 14, 58, 91,184 and 185 above).

213. In their reply
of 30 March 2005, the Croatian Government stated that the information
provided by the Slovenian Government was partially accurate. The proceedings
were still pending and had not yet ended. They further argued that the
execution proceedings could only be viewed in the context of the victim
status of two of the three applicants. However, relying on Eckle v. Germany (judgment of 15 July 1982, Series A no. 51,
p. 32, §§ 69 et seq.), Jensen v. Denmark ((dec.), no. 48470/99, ECHR 2001-X) and Kljajić v. Croatia (no. 22681/02, § 23, 17 March 2005), they
stressed that“an applicant’s status as a victim may depend on compensation
being awarded at domestic level on the basis of the facts about which
he or she complains before the Court and on whether the domestic authorities
have acknowledged, either expressly or in substance, the breach of the
Convention”.

214. The enforcement
proceedings could not be considered to be such a remedy as, firstly,
the proceedings had not taken place in the respondent State, secondly,
no compensation would be awarded to the applicants in relation to the
alleged violation and, thirdly, the authorities of the respondent State
would neither expressly nor in substance acknowledge the breach of the
Convention in relation to the applicants. Furthermore, even assuming
that the applicants recovered their pecuniary claims in their entirety,
this could not compensate for the many years of uncertainty to which
they had been exposed regarding their savings.

215. In any event,
the importance of these cases went beyond the individual applications,
since a large number of similar applications were pending before the
Court and the Osijek execution proceedings were an exception from which
only a very small number of savers could benefit.

216. Finally, on 5
October 2005, further to the Court’s request of 30 August 2005, the
Croatian Government confirmed that the information supplied by the Slovenian
Government on 25 July 2005, to the effect that Mr Kovačić and Mr Mrkonjić
had received full payment of their foreign-currency deposits, was correct.

B. The Court’s assessment

217. After the applications were declared admissible
on 9 October 2003, with the exception of the question of compliance
with the six-month rule which was joined to the merits, new factual
information has been brought to the attention of the Court.

218. Firstly, on 29 April 2004 Mr Mrkonjić informed
the Court that he had assigned to his representative Mr Žugić his
outstanding claim against the Zagreb Main Branch, namely CHF 28,562.14,
with interest and the costs of the proceedings. In return, Mr Žugić
had undertaken to pay 70% ofthat amount to the applicant by a certain date. On that date
Mr Mrkonjić informed the Court that he had withdrawn Mr Žugić’s
authority and cancelled the agreement since the latter had failed to
pay him the money due by the agreed date.

219. Secondly, on 25 July 2005 the Slovenian Government
informed the Court that, further to the Osijek Court of Appeal’s decision
of 7 July 2005, Mr Kovačić and Mr Mrkonjić had on 20 July 2005 received
payment of their foreign-currency deposits in full. Upon the Court’s
request – in other words, not of their own motion – the two applicants
and the Croatian Government confirmed on 19 September and 5 October
2005, respectively, that that information was correct.

220. The Court observes that it may “at any
stage of the proceedings” either reject an application it considers
inadmissible or strike it out of its list of cases. New factual information,
even at the merits stage, has led the Court to reconsider a decision
to declare an application admissible and subsequently to declare it
inadmissible under Article 35 § 4 of the Convention (see, for example, Medeanu v. Romania
(dec.), no. 29958/96, 8 April 2003, İlhan v. Turkey [GC], no. 22277/93, § 52, ECHR 2000-VII,
and Azinas
v. Cyprus [GC], no. 56679/00, § 37-43, ECHR 2004-III).

221. Similarly, at an advanced stage of the proceedings,
the Court may consider whether there exists a situation conducive to
the application of Article 37.In order to conclude that the matter has been resolved within
the meaning of Article 37 § 1 (b) and that there is therefore no longer
any objective justification for the applicant to pursue his application,
the Court must examine, firstly, whether the circumstances complained
of directly by the applicant still obtain and, secondly, whether the
effects of a possible violation of the Convention on account of those
circumstances have also been redressed (see Pisano v. Italy [GC] (striking out), no. 36732/97, § 42, 24
October 2002).

222. The Court finds it necessary to ascertain
in each of the present cases whether the new facts brought to its attention
may lead it to conclude that the matter has now been resolved and, if
not, whether the continued examination of the applications is still
justified.

Article 37 § 1 of the Convention provides as
follows:

“1. The Court may at any stage of the proceedings
decide to strike an application out of its list of cases where the circumstances
lead to the conclusion that

(a) the applicant does not intend to pursue his
application; or

(b) the matter has been resolved; or

(c) for any other reason established by the Court,
it is no longer justified to continue the examination of the application.

However, the Court shall continue the examination
of the application if respect for human rights as defined in the Convention
and the Protocols thereto so requires.

2. The Court may decide
to restore an application to its list of cases if it considers that
the circumstances justify such a course.”

223. Uncertainty remains as regards the agreement
whereby Mr Mrkonjić assigned his outstanding claim against the Zagreb
Main Branch to his representative Mr Žugić. Mr Mrkonjić plainly considered
himself bound by that agreement whereas according to Mr Žugić it never
entered into force. If it was found that Mr Mrkonjić had validly assigned
his claim for consideration, the question would arise whether he could
still be considered a “victim” within the meaning of Article 34
of the Convention. Be that as it may, the Court takes the view that
there is no need for it to decide that issue in the present case for
the following reasons.

224. It is clear that Mr Kovačić and Mr Mrkonjić
have now received payment in full of their foreign currency deposits
(see paragraphs 118, 143 and 219 above); as regards them, the matter
has therefore been resolved (Article 37 § 1 (b)).

225. Moreover, when invited to make submissions
on the matter of just satisfaction on 7 April 2004, neither Mr KovačićnorMr Mrkonjić
specified their claims within the time allowed.

226. The Court therefore finds that both these
applicants failed to make their claims for just satisfaction within
the time-limit. Consequently, it makes no award under this head.

227. As to the third applicant, Mrs Golubović,
the Court considers that in cases in which liability for a former State’s
debt is disputed by the successor States, a claimant can reasonably
be expected to seek redress in fora where other claimants have been
successful. For reasons which remain unexplained, Mrs Golubović took
no action in Croatia although she would likely have been successful
had she done so. In any event, it would still be open to her to bring
proceedings in Croatia. As to the matter of just satisfaction, Mrs Golubović
did not specify her claims within the prescribed time-limit.

228. In view of these circumstances and of its
conclusion concerning the applicants Mr Kovačić and Mr Mrkonjić,
the Court considers that it is no longer justified to continue the examination
of her application (Article 37 § 1 (c)).

229. Furthermore, the Court is satisfied that
respect for human rights as defined in the Convention and its Protocols
does not require it at present to continue the examination of the applications
(Article 37 § 1 in fine).

230. Consequently,
the cases should be struck out of the list.

IV. APPLICATION OF RULE 43 § 4 OF
THE RULES OF COURT

231. Rule 43 § 4 of the Rules of Court provides:

“When an application has been struck out, the
costs shall be at the discretion of the Court. ...”

232. The Court reiterates that an award can be
made to an applicant in respect of costs and expenses only in so far
as they have been actually and necessarily incurred and are reasonable
as to quantum (see, for example, Bottazzi
v. Italy [GC], no. 34884/97, § 30, ECHR 1999-V). Moreover,
the applicant is required to submit itemised particulars of all claims
made, together with the relevant supporting documents or vouchers, failing
which his claim may be rejected in whole or in part (Rule 60 § 2) (see Pisano,
cited above, §§ 53 and 54).

233. Those principles should also be observed
in the application of Rule 43 § 3, which leaves the costs at the discretion
by the Court when it decides to strike an application out of its list,
either by a judgment or by a decision (see Ertürk v. Turkey (dec.), no. 49683/99, 4 May 2006).

234. The Court notes that, despite having been
invited to do so, the applicants made no submissions after the decision
on admissibility as to the costs and expenses they had incurred before
the domestic authorities or the Court. The Court further notes that
it has granted them legal aid for the proceedings up to and including
the hearing on 9 October 2003. In addition, Mr Kovačić and Mr Mrkonjić
were awarded costs and expenses in the subsequent domestic enforcement
proceedings (see paragraphs 116 and 142 above).

235. In these circumstances, the Court is satisfied
that the applicants have been sufficiently reimbursed both in the proceedings
before the Court as well as under domestic law and sees no reason to
examine this point further (see Ohlen v. Denmark (striking out), no. 63214/00, § 38, 24 February 2005).

FOR THESE REASONS, THE COURT UNANIMOUSLY

1. Holds that the heirs to the applicants Mr Kovačić and Mrs
Golubović have standing to continue the present proceedings in their
stead;

2. Decides to strike the applications out of its list of cases.

Done in English, and notified in writing
on 6 November 2006, pursuant to Rule 77 §§ 2 and 3 of the Rules of
Court.